Buying a Business vs Starting One: Why Acquisition Often Wins

Quick answer. Acquiring a profitable company means buying revenue, a client base and a working team, at the cost of a higher entry ticket. Starting from scratch is cheaper upfront but faces full market risk: according to France's INSEE, only 69% of businesses created in the first half of 2018 (excluding micro-entrepreneurs) were still active five years later.

The choice between buying an existing business and starting one is not about ambition. It is about two different risk profiles. Starting means turning an idea into demand. Buying means acquiring an activity that already runs: an order book, supplier contracts, a known brand, sometimes trained staff.

The founder carries high market risk and little or no income during the launch phase. The buyer carries financial risk (the purchase price) and transition risk (the seller leaving, client loyalty). The right call depends on your equity, your appetite for risk, and how quickly you need to pay yourself.

At Hayot Expertise, we support both journeys. Our view is straightforward: if you have a trade skill and available capital, acquisition usually shortens the road to profitability. If you carry an innovation with no existing model, starting is the only path, and our markers for setting up and structuring your company then apply in full.

The clearest advantage of acquiring an existing company is immediate profitability. You inherit an income statement that already generates an operating surplus, whereas a founder often waits two to three financial years to break even.

The benefits of an acquisition fall into three families:

• Proof of market. Revenue exists, margins are documented, and the accounting history is verifiable through the tax return and the standardised accounting entries file (FEC).
• Immediately productive assets. Clients, recurring contracts, commercial leases, a trained team, the lease right: all items a founder would have to rebuild one by one.
• Easier bank financing. Banks lend more readily against past cash flows than against a forecast. Buying a company that works reassures the lender.

There is a flip side. You also inherit the liabilities: disputes, social and tax debts, unbalanced contracts, dependence on a single client or on the departing manager. This is exactly what acquisition due diligence addresses, as we explain in our method for spotting accounting red flags in three weeks.

The cost of an acquisition breaks down into four blocks: the purchase price, registration duties, advisory fees (consulting, audit, legal) and the working capital to fund after the deal closes.

Registration duties depend on what you buy. Acquiring a goodwill (fonds de commerce) is not taxed like buying the shares of the company that operates it. This is a major decision point, which we cover in our complete guide to selling a goodwill in 2026.

The minimum duty on a goodwill is 25 EUR. A 500,000 EUR allowance applies when the buyer is an employee on a permanent contract for at least two years or a relative of the seller, subject to holding and continuity conditions. By contrast, buying SAS shares at 0.1% is far lighter than buying a goodwill, which often tips the balance between an asset deal and a share deal.

An acquisition funding plan usually combines personal equity, a bank loan, and guarantee or honour-loan schemes. The more profitable the target, the more bank leverage you can mobilise.

Here are the financing blocks to activate, in the order we build them with our clients:

1. Size your personal equity. In practice, budget 20% to 30% of the price to reassure the bank. It is the credibility base of the file.
2. Reinforce equity with an honour loan. Bpifrance's creation-acquisition honour loan ranges from 1,000 to 80,000 EUR, at zero interest and with no personal guarantee, and counts as equity alongside the bank loan.
3. Apply for the acquisition bank loan. Backed by the target's cash flows, usually over five to seven years.
4. Secure the lender with a guarantee. Bpifrance's transmission guarantee can cover a significant share of the bank loan, reducing the personal surety required.
5. Structure through a holding company when the deal justifies it, to move the target's dividends up and repay the acquisition debt.

A holding structure can, under conditions, deduct loan interest through tax consolidation (French Tax Code, art. 223 A), which requires at least 95% ownership and a five-year election. We describe this scheme in our dedicated article on setting up a holding company: it is powerful, but framed by anti-abuse rules you must anticipate before signing.

Acquisition by an employee or a relative. The 500,000 EUR allowance on goodwill registration duties changes the maths for an employee on a permanent contract for over two years or a family member of the seller. Check the holding-period and continuity conditions before relying on it.

Buying a distressed company. Acquiring a business in insolvency proceedings (receivership, sale plan) falls under a separate legal framework. The price can be symbolic, but the operational and social risk is real: we cover this scenario in our analysis of buying a company for one euro.

Founder eligible for ACRE. The aid for founders and buyers (ACRE) was tightened on 1 January 2026: it is now reserved for targeted profiles (jobseekers, RSA recipients, buyers of distressed companies, among others), with an application to be filed with Urssaf within 60 days. The exemption rate also shifts during the year. Do not build a cash plan assuming ACRE is granted.

The underestimated risk in an acquisition is not the price: it is dependence on the seller. When 40% of revenue rests on the departing manager's personal relationships, value evaporates once they leave. We always insist on a contractual handover period and staged payment (vendor loan, earn-out clause).

What the tax authority scrutinises in a share deal: the economic substance of the structure, especially where a holding buys a company in which the purchaser was already a shareholder or employee. Anti-abuse rules strictly frame interest deductibility in these cases. Have the scheme validated upfront.

Other frequent blind spots in the files we handle:

• Working capital underestimated after the deal, draining cash at the worst moment.
• Key contracts (commercial lease, client contracts) not transferable without consent, discovered too late.
• A representations-and-warranties clause that is too short or capped too low to cover a tax reassessment.

Recently, an industry executive asked us to arbitrate between launching their own workshop and acquiring a family-owned SME with 1.8 million EUR in revenue, whose manager was retiring. On paper, starting cost three times less. But our review of the target's tax return and cash position showed a stable operating surplus over five years, recurring clients and a six-month order book. The start-up forecast generated no income before two years.

We recommended the acquisition, financed by personal equity, an honour loan and a bank loan backed by the target's cash flows, all secured by a twelve-month handover from the seller. The buyer drew a salary from the first month.

The lesson we take from acquisition files: the profitability of an established target almost always beats the savings of a start-up, provided you audit the liabilities seriously and lock down the transition. Starting remains unbeatable for an innovation with no reference market. As chartered accountants registered with the Ordre and statutory auditors, this fact-based reading of the accounts is exactly what we bring before signing.

Hayot Expertise tip. Before any letter of intent, commission an independent valuation of the target and an acquisition audit. Then compare the total cost of the deal (price, duties, working capital) against a forecast for an equivalent start-up over three years. Our growth strategy and valuation support secures this fact-based diagnosis.